Peer 2 Peer lending, small loans, small investors
This was kind of a random idea that crossed my mind but it sounded kind of interesting as I thought more about it. Fractional investing in many things is popular these days, crypto, stocks, etc.
Essentially I thought what if there was a way for average people to become a sort of micro loan investor.
Scenario:
Person Wants $500 loan but doesn't want to go through a bank for whatever reason. Posts up an inquiry for a $500 loan they want.
Say 4 or 5 people want to put up a percentage of the money to fund this loan.
Loan gets funded by those people but only once 100% of the loan is covered by investors.
Person pays back the loan with an additional fee on top(a fee/interest) which gets divided up. People who invested to fund the load get back their original investment. A percentage of the additional fee/interest goes to the business and a percentage goes back to the investors(their profit) and is adjusted individually based on how much of the loan they funded.
This is kind of a loose outline but does this sound interesting to anybody?
It happens: a person finds himself in a difficult life situation, loses the ability to pay, the bank charges him fines and penalties. It becomes more and more difficult to pay, and eventually it is lost. Sometimes your property can be taken from you. When I had a debt on a loan and I didn’t know what to do, I was advised by the service https://attorneydebtfighters.com/sued-by-portfolio-recovery-associates/. I turned to portfolio recovery associates lawsuit and they found an option how to help me in such a difficult situation
The first thing that shocked me when arriving to the UK was to see companies actually advertising such loans on TV! and they seem pretty likely to break your legs if you don’t pay back on time. I’m really amazed they are considered legal. People accepting those loans are clearly not in position for this to considered a consensual agreement. It is plainly criminal abuse of power.
I like this idea but what's the guarantee that the borrower will ever return the money?
You could say the same about a bank. But also the stock market. Based on the premise of this idea people are 'investing' money to fund the loan. Investing inherently means there is risk. You buy a stock but it's never a guarantee you won't lose money instead of make it.
I should've phrased my question differently. Stock markets and banks are regulated which gives me some assurance and a sense of security. If there's fraud, there's at least a legal recourse.
How will you make users trust your platform?